Onto Innovation (ONTO) is back in focus after announcing a collaboration with Rigaku that includes acquiring a 27% stake, alongside stronger than expected first quarter results and fresh attention from Artisan Partners.

Those Rigaku and Q1 updates arrived alongside a 6.22% 1 day share price return and a 62.17% year to date share price return, while the 1 year total shareholder return of 170.45% and 5 year total shareholder return of 259.61% point to strong longer term momentum, despite a 1 month share price return that is down 5.51%.

If Onto Innovation’s recent jump has you thinking about where else AI related demand could show up, it is worth scanning the 48 AI infrastructure stocks

With Onto Innovation trading at US$268.99 and analyst targets sitting higher, yet the stock already showing a very large 1 year total return, investors may question whether there is still upside potential or if the market is already pricing in future growth.

Most Popular Narrative: 29.2% Undervalued

According to the most followed narrative, Onto Innovation's fair value of $380 sits well above the recent $268.99 close. This frames the current price as a sizable discount that hinges on AI packaging demand and metrology adoption.

The AI semiconductor race is no longer only about who designs the fastest chips. Increasingly, success depends on who can package, stack, inspect, and manufacture those chips reliably at scale.

Want to see what backs up that $380 figure? The narrative leans heavily on future earnings power, richer margins, and a premium profit multiple usually reserved for category leaders.

Result: Fair Value of $380 (UNDERVALUED)

However, this hinges on AI packaging demand and HBM capex staying robust, and on competitors or export controls not eroding Onto Innovation’s position more quickly than expected.

Another View: Pricing In A Lot Of Good News

That US$380 narrative fair value leans on strong earnings growth and a premium profit multiple, but our multiples based check paints a tougher picture. Onto Innovation trades on a P/E of 125.7x, compared with 62.7x for the US Semiconductor industry, 76.6x for peers, and a fair ratio of 67.5x. In plain terms, the stock is already priced far richer than both its sector and what our fair ratio suggests the market could move toward. This raises a simple question for you: How comfortable are you paying that kind of premium for the current story?

Next Steps

With mixed sentiment around Onto Innovation, the key question is how the risk and reward trade off looks to you. To explore this further, take a closer look at the 2 key rewards and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.